0
0

The Georgist Blindspots


 invite response                
2011 Aug 22, 10:14pm   28,071 views  130 comments

by Reality   ➕follow (7)   💰tip   ignore  

The so-called "geolib" position has been long refuted many years ago:

http://mises.org/rothbard/georgism.pdf

Bob/Troy's pet link article written by Dan Sullivan makes several rudimentary errors:

1. It's a farce to make a distinction between "community" and "government" when the so-called "community" has the power to tax. "Communitarianism" is a just a new-age name for "communism" when the latter went out of fashion. A plantation owner is the government of the plantation regardless what he euphemistically calls his rule.

2. Arden is a corporation just like most towns in the US are incorporated. The fact that even the only alleged working example of "one-tax" in the entire article can only collect 1/4 of what it allegedly is entitled to goes to show just how absurd it is to try to tax the entire land rent. Incidentally, 1/4 of alleged land rent is comparable to 1-2.5% property tax, assuming properties are 10x-20x rent income and land accounting for about half of property value. It should be no surprise that most towns in the country pay for all their expenses out of property tax . . . so the whole Arden experiment is a farce, and little different from most other incorporated town that collect property tax or a giant trailer park, where the incorporated landlord rents out land and provide "community" service . . . and more importantly makes rules.

3. Land can certainly be created by human effort: land filling, for example. Half of Holland wouldn't exist if not for land making. Many city land plots on the two coasts would be under water too if not for man-made land.

4. Land is not a limiting factor in modern economic growth. Agriculture has ceased to be the primary economic engine since just about Henry George's time. High cost of rent in population centers has little to do with alleged land monopoly but everything to do with people's desire to be in those locations running up against zoning laws restricting housing supply. The most recent housing bubble was an experiment in bypassing the "landlords" altogether, and guess what happened? the cost of housing did not go down but went up instead! It's the competitive supply vs. demand that set price. "Landlords" with numerous others nearby to compete against do not collect a monopolist Rent.

5. The proposed "one-tax" "land tax" however would be monopolistic Rent imposed on the rest of the economy by the bureaucratic class. It's ironic that Dan Sullivan would use the term "royal libertarian" to describe his critics. Most land titles in the US have little to do with old feudal land titles. OTOH, his proposed land taxation to the full economic value of the land would concentrate land ownership into the hands of the government thereby creating a new land-based royalty. In other words, the so-called "geolibs" are the "royal libs" . . . in the same way that "communists" are often effectively feudalists/monarchists as their policy proposals would lead to feudal dark ages with a new class of royalty on top, like in North Korea, which incidentally does have all land owned by the government

6. Georgists are dealing with mythical concepts when they talk about "land" as separate from improvement, just like their use of terms "community" / "government" / "the public." There is not a "community" / "government" / "the public" separate from concrete actions by individuals on the ground. Likewise, "land," as nice as an abstract concept, can not be separated from improvement. Most land plots were reshaped by developers before selling to the current owners (or their predecessors) along with infrastructure that was part of the sale. Government had little to do with that.

7. Where the government does have a role, one which really confuses the Georgists, is that it maintains a record of deeds and titles that make future land disputes easier to settle in court. Having that record does not mean that the government owns all the land or is entitled to collect all rent on that land . . . any more than the registrar of motor vehicles has the right to collect the entire use value of your car! or on all the iron in your car! Iron as an element is actually finite on the planet and not made by human. Your exclusive right to the iron content in your car before the car is recycled is your property right, despite the title paper playing a significant role in settling disputes should any arise. Likewise, it would be silly to talk about the value of the iron in a car as separate from the car's manufacturing before the car is ready for recycling and reduced to components. Georgists are obviously not talking about the trash/recycling value of land (say, how much a plot is worth if the entire area is wiped clean by fire or flood) but trying to have the government monopoly collect rent on land with improvements just like steel as part of a working car's value. Land value is inseparable from improvement. Henry George eventually had to draw an arbitrary line that improvements lasting longer than the life span of the improver should be deemed part of "land." In other words, a policy of discouraging long term land improvement and management.

8. Why is this topic important to renters? Because it is important to understand that "rent" would become much higher in a monopolistic land management system. The term "Rent" originally refers to monopolistic market positions. The use-fees that owners of properties collect in competition against other property owners are not monopolistic rent. The Georgist one-tax (much higher tax) on land value would actually create a monopoly Rent to be imposed on the rest of the economy. While the property owners can and do compete on their own margins of operation, they do not compete on the tax portion, which all "landlords" have to collect on behalf of their Landlord, the government. The Georgist aim to collect the entire land rent means land would have zero value, and negative value during economic down turns. That means eventual government take-over of all land ownership. Just like what a nightmare things turned out in countries where "capitalists" were cut out and the government became the only employer (i.e. the soviet system where "they pretend to pay and we pretend to work"), letting the government become the only landlord without any sub-divided and competitive land and property maintenance/management services on the ground would be disasterous to renters seeking good housing at reasonable prices. It is another competitive capitalist employer's ability and willingness to pay just a little more to hire you away that keeps your real wage up; likewise, it is another competitive landlord's offer of better housing at lower price that lets you get the bang for your buck on housing.

#housing

« First        Comments 122 - 130 of 130        Search these comments

122   Reality   2011 Aug 26, 4:29am  

Cook County resident says

Around here people did use open market oil. Almost everybody switched to gas decades ago and stayed with it.

If gas price go up tremendously vis oil, people would just switch back. Isn't choice a good thing?

The water is cheap enough that I'm not worried about what it costs. A few bucks a month. If it were free it wouldn't much cheaper for me.

Government water is a pretty good deal.

Depending on where you live. Where you live, on the shores of the Great Lakes, water is almost a "superabundant" good.
In other places, it might not be. A friend of mine just paid a water bill costing over $10,000.

Huh?

Government monopolies are dictatorial, at least until the next election. Even then not all activities in the government monopoly can be realistically put on the ballot at election time. That's why it's far better to let people vote with wallets every minute of the day.

Who cares? As long as Jobs isn't trying to open a water treatment iPlant and install iPipes and try to sell me iWater iWon't care either. In fact, nobody is going to try to install a competing infrastructure. This is one of the things that government does very well.

On the shores of the Great Lakes, you don't care about water pricing. You would care about water pricing if you were in a desert. Is housing or medicine as "superabundant" as water where you live?

123   corntrollio   2011 Aug 26, 4:42am  

Reality says

California was just taking the lead in the nation, as usual. Oregan, Washington, Colorado and Massachussetts passed similar measures in the years following California did.

Are you talking about deferral programs?

For example, in Oregon:
http://www.oregon.gov/DOR/SCD/changes-impacting-deferral.shtml

This is absolutely not the same as California. This type of program is directly targeted at low income seniors, has limits on principal, has limits on home value, requires recertification every 2 years, and the deferral has to be paid back on sale. Prop 13 is broadreaching and has many other consequences, and the money is never paid back.

Washington is also a deferral program and has limits:
http://dor.wa.gov/Content/FindTaxesAndRates/PropertyTax/IncentivePrograms.aspx

Massachusetts, deferral:
http://www.mass.gov/Ador/docs/dls/publ/forms/97_41A_application.pdf

Colorado, deferral:
http://www.co.pierce.wa.us/pc/abtus/ourorg/at/content.htm#Senior%20Citizen%20and%20Disabled%20Persons%20Exemptions

New York, deferral:
http://www.aging.ny.gov/Housing/Resources/PropertyTaxDeferral.cfm

If you think this is the same as Prop 13, you are dead wrong, and you fundamentally misunderstand the nature and consequences of Prop 13.

124   Reality   2011 Aug 26, 5:05am  

corntrollio says

Are you talking about deferral programs?

No. I was talking about caps on how fast property tax can rise every year. WA caps at 1% per year by tax district (not on each house), OR caps at 3% annual increase on each house, MA caps at 2.5%, NY caps at 2%.

If you think this is the same as Prop 13, you are dead wrong, and you fundamentally misunderstand the nature and consequences of Prop 13.

As you can see, these are actual caps, similar to Prop 13's 2% annual increase limit. Let's try to keep poetic outbursts and elaborations to minimum.

125   Cook County resident   2011 Aug 26, 5:43am  

Reality says

If gas price go up tremendously vis oil, people would just switch back. Isn't choice a good thing?

Sure, but for the time being we can't beat the government regulated monopoly. And no waiting for the tanker truck. The infrastructure is already here.

Reality says

Depending on where you live. Where you live, on the shores of the Great Lakes, water is almost a "superabundant" good.
In other places, it might not be. A friend of mine just paid a water bill costing over $10,000.

$10,000 a month for water? Time to fix that toilet!

Reality says

Government monopolies are dictatorial, at least until the next election.

As long as their dictates are below my attention level, such as my water bill, they can dictate whatever they please.

Reality says

Even then not all activities in the government monopoly can be realistically put on the ballot at election time. That's why it's far better to let people vote with wallets every minute of the day.

They were holding a water election at the grocery store today. My wallet voted for Government Dictator water.

Reality says

On the shores of the Great Lakes, you don't care about water pricing. You would care about water pricing if you were in a desert.

But I"m stuck with whatever Government Dictator water costs, even if it costs $10,000. Even if water is superabundant, the distribution system is still a monopoly. There isn't any real competition. Yet, very good water is cheap and right at the tap everyday.

Thank you, Government Dictator Water Monopoly!

Reality says

Is housing or medicine as "superabundant" as water where you live?

I've never seen so many For Sale signs in yards, and I'm sure the shadow inventory is much larger.

There's a couple of hospitals within a couple of miles and several clinics.

126   Reality   2011 Aug 26, 5:53am  

Cook County resident says

Sure, but for the time being we can't beat the government regulated monopoly. And no waiting for the tanker truck. The infrastructure is already here.

The latent supply from the ability to switch to oil provides some competition . . . and that's a good thing.

As long as their dictates are below my attention level, such as my water bill, they can dictate whatever they please.

In other words, water is almost superabundant in your area. i.e. it's almost outside the realm of discussion for economics, which talks about limited resources and their distribution/allocation . . . i.e. things that have market prices that you do care.

I've never seen so many For Sale signs in yards, and I'm sure the shadow inventory is much larger.

There's a couple of hospitals within a couple of miles and several clinics.

Try to find out if the sellers would give you the houses for almost free, or the doctors and nurses would come to work without being paid.

They probably would give you some water for free, if you ask nicely.

That's the difference between superabundant goods (which does not need economic efficiency) vs. limited resources, where economically efficient distribution and allocation is very important.

127   corntrollio   2011 Aug 26, 8:07am  

Reality says

As you can see, these are actual caps, similar to Prop 13's 2% annual increase limit.

Well, that doesn't mean they're not equally misguided. If anything, people say the same things in those states from a quick survey -- state control is a huge issue. Certainly they still have the 6 problems I mentioned above, among other things. Your basic argument is "newcomers and young people should pay more" but that's not really a great tax policy and just defers the cost of things to future generation, much as the boomer generation has done. That's what causes pitchforks.

128   Reality   2011 Aug 26, 8:16am  

corntrollio says

Your basic argument is "newcomers and young people should pay more" but that's not really a great tax policy and just defers the cost of things to future generation, much as the boomer generation has done. That's what causes pitchforks.

Please do not misquote me I did not say that "newcomers and young people should pay more." I said, the tax collectors can probably get away with collecting more tax from new home buyers . . . therefore they do.

There is no deferral involved here.

If we really want to find some small degree of fairness in that tax policy, then since most new home buyers buying into the expensive neighborhoods do that in order to register their kids in the schools, and the schools take up the vast majority of the town's budget , so there.

Like I mentioned before, it's a scheme for maximizing the amount of tax collected.

129   corntrollio   2011 Aug 26, 8:39am  

Reality says

If we really want to find some small degree of fairness in that tax policy, then since most new home buyers buying into the expensive neighborhoods do that in order to register their kids in the schools, and the schools take up the vast majority of the town's budget , so there.

That's a dubious claim -- not everyone moves to expensive areas in order to get a good school district. Otherwise, large portions of San Francisco would be empty.

Second a large portion of school funding in CA comes from the state, not the locality. It used to be the reverse.

Third, many school district lines do not match with town lines in CA, so no, they don't take up most of town budgets. Counties accrue lots of property tax revenue, but little of this goes to schools (see how many times the word "school" shows up in the FY2011 Santa Clara County budget, if we're talking about expensive areas with good schools). Even in an expensive well off city like Los Altos, property taxes for Los Altos elementary district don't cover school budgets: http://www.losaltos.k12.ca.us/financial/PDF_Files/2010_11_exec_sum.pdf, and they point out that it's unusual that property taxes go as far as they do in Los Altos -- in many other cities, they don't cover anywhere near 64%.

Fourth, this rationale doesn't work for inter-generational transfers.

Like I mentioned before, it's a scheme for maximizing the amount of tax collected.

Yeah, that makes no sense.

130   Cook County resident   2011 Aug 26, 10:50am  

Reality says

The latent supply from the ability to switch to oil provides some competition . . . and that's a good thing.

Latent supply isn't an significant issue. As far as I know, there's only one heating oil supplier left and I haven't seen one of their tanker trucks in traffic in years. The cost of electric heat makes it a total non issue.

The regulated monopoly gas company has been the best choice for decades.

Reality says

In other words, water is almost superabundant in your area. i.e. it's almost outside the realm of discussion for economics, which talks about limited resources and their distribution/allocation . . . i.e. things that have market prices that you do care.

Sure, I could take a bucket to the lake or river and fill it up, but the supply of clean drinkable water is limited to what's available from the Municipal Water Monopolies.

The Municipal Water Monopolies do an excellent job of reliably suppling very good water at a low price -- without competition.

Reality says

Try to find out if the sellers would give you the houses for almost free, or the doctors and nurses would come to work without being paid.

There is a superabundance of homes for almost free in violent, jobless areas. I'm not interested.

There will never be the sort of superabundance of doctors and nurses which will have them working for almost free. They are capable people and will find other jobs. There is an argument which says we should supply free medical education for Docs and Nurses in order to increase the supply and reduce costs.

« First        Comments 122 - 130 of 130        Search these comments

Please register to comment:

api   best comments   contact   latest images   memes   one year ago   random   suggestions   gaiste